Foreign Aid in Africa: Morgen Makombo Sikwila

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Foreign aid has disintegrated the relationship between the state and its citizens. Foreign aid has not only failed to spur the growth and development in Africa that it initially promised, but it is causing a deterioration of the relationship between governments and their citizens.

At the superficial level, providing foreign aid to poor economies should be a reliable way to boost development and improve the living standards of local people. After all, foreign aid can be used for the construction of schools, improve health delivery systems and roads that empower citizens economically and socially. Unfortunately, this has not been the case. Sub-Saharan Africa has received significant foreign aid over the years, yet the region remains the poorest in the world.

The prevailing poor living standards in sub-Saharan Africa show that foreign aid hasn’t effectively met its intended objectives of stimulating growth and development. This failure is attributed to an array of causes. The writer concerned not just about the aid’s ineffectiveness but also its adverse unintended consequences.

The state-citizen relationship, a critical ingredient for development, is one of the areas where the unintended impact of foreign aid is being felt. Mitigating both the inefficiencies and adverse unintended consequences of aid requires a thorough understanding of how foreign aid can harm the relationship between the state and its citizens.

Governments are primarily responsible for providing public goods and services, and spearheading initiatives to propel growth and development. Any government that successfully provides such amenities is more likely to be judged as competent by its citizens. Contrarily, when these expectations are unmet citizens express their displeasure through, amongst other things, protests, and voting against the government in elections.

Governments fund projects using revenue from taxes and debts. Foreign aid supplements this revenue in the form of loans and grants. Aid can be offered as budget support – a transfer of cash to the recipient country – or project assistance – implementing projects in the recipient country. Since most governments in sub-Saharan Africa find it challenging to self-fund adequate projects, foreign aid has become a major source of funding for these programmes.

To obtain recognition for their benevolence, foreign aid donors often openly disclose their aid transfers and brand the projects they fund with flags and logos. But this has implications for how citizens evaluate their own government’s performance.

The relationship between the state and its citizens is a form of ‘fiscal contract’ in which the state, in exchange for the public goods and services it provides, receives a compliant attitude from citizens to tax payments and other civic responsibilities. When the government is not the primary provider of public goods and services, this contract can be broken, and citizens may feel inclined to withhold their side of the bargain. The continuous inflow of aid means actors other than the local government increasingly become the primary providers of what citizens expect from their governments, and this influences how people view the state. Zimbabwe is a case in point.

The inflow of aid into Zimbabwe has resulted in poor perceptions of governance among the citizenry. People residing close to aid projects rate their government as poor managers of the economy, express lower levels of trust in the government and consequently promises to vote against the government in elections. These citizens also perceive government officials as involved in corrupt activities, which plays into perceptions of donors using aid to advance their own interests. Since some foreign aid comes with specified conditions, recipient governments are often compelled to prioritise the conditions of the aid over national needs.

These practices help generate negative perceptions about foreign aid and governance, leading to a breakdown of the relationship between governments and their citizens. Consequently, not only is the effectiveness of foreign aid in doubt, but it may be doing more harm than good.

The deterioration of the state-citizen relationship as a result of foreign aid is detrimental to development and needs to be mitigated. The poverty levels in sub-Saharan Africa suggest that foreign aid hasn’t been effective as intended in stimulating economic growth. If these same aid flows are contributing to the collapse of trust between the state and its citizens, then the use of foreign aid as a development tool needs to be comprehensively reevaluated.

The idea of aid took off in the 1920s-30s, when wealthier countries started to make regular donations to some places including Latin America and Africa. Before this, there had been some sporadic donations in the 19th Century, but nothing as structured as the modern aid schemes. The donation of aid, with or without repayment, continued after African countries gained their independence, with donations supposedly going on economic development. However, the success rate is hard to see. Forty percent (40%) of the African population is still living in extreme poverty (living off less than $2.00 a day), compared to 0.3% of the European population. Although some aid programmes have been successful in areas such as governance and youth entrepreneurship, the overall image is much bleaker. In 2017, the UK allocated 50.8% of bilateral ODA (overseas development assistance) to Africa, amounting to £3.0 billion – on the face of it, this may appear to be helping Africa, but it’s worth probing deeper to evaluate the full effects of aid.

It is apparent that aid hinders local business. In a very simple way, the donation of goods through charities, clearly damages local industries and businesses and the livelihoods of those who own and or work for them. A very easy change would be for charities to buy products from local producers, rather than importing them from elsewhere. If foreign donors spend their funds domestically, this would contribute to GDP, help local business flourish, and create jobs, whilst also providing cheap products for local people. Even this is not sustainable! The change above requires donor to continue to be involved to subsidise the cost of products so that they can be sold cheaply. Instead, there is aneed to remove any form of aid from the process altogether, so that countries can develop in a self-sufficient and sustainable way.

A key problem with aid is that it has created aid dependency. African countries know that aid will pour in every year and so there’s little incentive to raise the funds themselves and promote local business. This steady stream of income can be toxic as it adds to the difficulty of encouraging economic growth. Although these funds may have specific conditionalities attached (i.e. they must be spent on certain things), often there is little accountability for this, and little thought put into the conditions. For example, the beneficiary may be required to spend a certain percentage of funds on economic growth, whilst aid in itself hinders economic growth, a direct contradiction. These conditions create power for the donor and take control away from the recipient. The bypassing of governments (i.e. creating conditions without consulting the recipient governments) has also reduced accountability, with people unable to hold large institutions, such as the World Bank, accountable. Interestingly, some of the most successful aid programmes have been recipient-lead: that is the recipient country deciding where the funds are spent.

Not only can aid create aid dependency, but aid can also add to corruption, forcing the funds away from citizens living below the poverty datum line, and into the hands of the elite. This idea is supported by World Systems Theory, developed by Immanuel Wallerstein, which posits that money and power moves from the periphery to the core in an exploitative relationship – this happens on an international and national scale. Aid can be seen to fit into the World Systems Theory both internationally and nationally; internationally because it can force African countries into a dependent relationships with another country or institution (i.e. the power flows from African countries to their donor), and nationally because as aid arrives in recipient countries, the money and power flows from the population (the periphery) to the elites (the core). Countries receiving aid can often find themselves stuck in exploitative relationships, with climbing levels of debt. The balancing of debt repayments and wanting to spend money domestically becomes increasingly difficult and has led to the African Social Forum call for debt cancellation . In Dead Aid: Why Aid Makes Things Worse and How There is Another Way for Africa, Dambisa Moyo also explains how aid leads to a cycle of corruption, with foreign aid propping up corrupt governments and allowing them to remain in control. These governments interfere with the rule of law, make it easier for them to keep possession of power, make the country unattractive to invest in, and force more people into poverty. Consequently, the country receives more donations, which are pocketed by the rich. This creates a vicious cycle, which supports systematic corruption.

It’s difficult to know which direction is best to take, although we can be certain that the current structure of aid is damaging and needs amending. A popular route supported by Moyo and many others is to focus on trading partnerships, rather than the paternal relationships created by aid. China is already leading the way in trading with Africa. An increase in trade would allow local industries and businesses to expand their customer base, hopefully increasing sales, creating jobs, and adding to GDP. A healthier economy also leads to increased lending for new business ideas and increased foreign investment. Africa’s main aim must be to move from aid to trade and investment. This way average income would increase for a much larger percentage its population. The trade route certainly looks a promising one and many African countries are should be pursuing this.

Many people would like to think that aid donations come from good intentions, that donors really do care about helping those living in poverty. If they really do care, donors would look at what aid has done to Africa and realise that they are not helping at all, instead donors are creating aid dependency and a breeding ground for corruption. With this in mind, donors should surely have already changed the way they help those in poverty. Despite this information, donors continue to give aid, putting their intentions into question. Perhaps they’re more focused on the benefits they get out of donating, the feel-good hormone they get from believing they’re good people helping others, rather than focusing on the best strategies to pull people out of poverty. The road away from aid is a tricky one, it must involve donor countries realising that there is another way forward, a much more constructive and successful way of facilitating economic growth and subsequently helping those in extreme poverty.

Is foreign aid helping or hurting Africa?

Morgen Makombo Sikwila
MSc Peace and Governance
BSc Counselling
Diploma in Environmental Health
Certificate in Marketing Management
Phone: 0772823282
email morgensikwilam@gmail.com

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